Stakeholder management is a critical component of any sustainable business strategy. It involves identifying and engaging with all stakeholders who are affected by a company’s activities, decisions, and outcomes. In the past, companies focused mainly on maximizing shareholder value, but now the focus is shifting to a stakeholder economy, where businesses recognise that they have a responsibility to not only their shareholders but also to their customers, employees, suppliers, and the communities they operate in.
Stakeholder engagement should be managed as one would manage any other business function. So in this article, we will outline the 5 steps for companies to identify and engage with their stakeholders.
Companies should be clear about their objectives and goals for engaging with stakeholders. They need to define their communication strategies, decide on the timing of the engagement process, determine whether a debate or dialogue is needed, and identify the phase of the engagement process they are in. It is as well important to determine who will be responsible for leading the stakeholder engagement process.
For example, a company that is planning to launch a new product in the market will need to identify the stakeholders that may be affected by this product launch. The company may engage with customers, suppliers, investors, regulators, and NGOs to gain feedback and insights into the product’s potential impacts.
2- Stakeholders Mapping:
Identifying all stakeholders who may be affected by a company’s activities, decisions, and outcomes is crucial. Companies should list all stakeholders, identify their representatives, and group them into categories. Stakeholder mapping can be done in several ways, such as based on internal/external, influence/reputation, license to operate, social vs. environmental, activity type/sphere, and revenues.
For example, a company that operates in the energy sector may map its stakeholders based on their location and the impact of the company’s activities on their lives. The stakeholders may include local communities, regulators, NGOs, and investors.
Preparing for stakeholder engagement involves setting goals and objectives, defining the rules of engagement, identifying experts, selecting topics, composing teams, and gathering knowledge. Companies should determine what information they need to provide to stakeholders, what information they want to gather, and what kind of feedback they need to receive. Companies should also decide on the engagement methods and communication channels they will use.
For example, a company that is planning to engage with its employees to gather feedback on its diversity and inclusion policies may need to prepare a survey, identify experts who can analyse the results, and select the right communication channels to reach employees.
4- Consult & Interact:
The fourth step involves engaging with stakeholders in a transparent, inclusive, cooperative, and fair manner. You can choose different interaction techniques, such as information providing, information gathering, consultation, and open dialogue. The most important is to be receptive to stakeholder feedback and consider their perspectives while making decisions.
For example, a company that is seeking input from its customers on a new product launch may organise focus groups, send out surveys, or create a dedicated feedback portal for customers to provide feedback.
5- Respond & Implement:
The final step is to prioritise the issues that stakeholders have raised, ask stakeholders about the importance of each issue, and implement measures to stay credible. Companies need to address the issues that have been raised promptly and transparently and provide a written summary and follow-up.
For example, a company that is seeking input from local communities on the environmental impact of its activities may take steps to reduce emissions, improve waste management, or enhance its community outreach programs based on the feedback it receives.
Stakeholder engagement is a critical component of any sustainable business strategy. Engaging with stakeholders helps companies identify and manage risks, gain insights into customer needs and preferences, enhance reputation and credibility, and create shared value. By following the five steps of planning, mapping, preparing, consulting/interacting, and responding and implementing, companies can manage stakeholder engagement effectively and efficiently.
Contact Nadine Zidani now to learn more about our interactive workshop designed to support organisations in stakeholder management. Implement the efficient and smooth 5-step approach outlined in this article and empower your teams.